eBay 2011 Annual Report Download - page 125

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
performance under the subject agreement. GSI in many of its major online commerce agreements has provided an indemnity for other types of
third-party claims, which are indemnities mainly related to various intellectual property rights, and we have provided similar indemnities in a
limited number of agreements for our other businesses. In our PayPal business, we have provided an indemnity to our payment processors in the
event of certain third-party claims or card association fines against the processor arising out of conduct by PayPal or PayPal customers. In
connection with the sale of Skype, we made certain customary warranties to the buyer in the purchase agreement. Our liability to the buyer for
inaccuracies in these warranties is generally subject to certain limitations. With respect to certain specified litigation matters involving Skype that
were pending as of the closing of the transaction, we also agreed, among other things, to bear 50% of the cost of any monetary judgment that is
rendered in respect of those matters. It is not possible to determine the maximum potential loss under these indemnification provisions due to our
limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, losses
recorded in our statement of income in connection with our indemnification provisions have not been significant, either individually or
collectively.
Off-Balance Sheet Arrangements
Based on differences in regulatory requirements and commercial law in the jurisdictions where PayPal operates, PayPal holds customer
balances either as direct claims against PayPal or as an agent or custodian on behalf of PayPal's customers. Customer funds held by PayPal as an
agent or custodian on behalf of our customers are not reflected in our consolidated balance sheet. These off-balance sheet funds totaled
approximately $2.7 billion as of December 31, 2011 and 2010 . These funds include funds held on behalf of U.S. customers that are deposited in
bank accounts insured by the Federal Deposit Insurance Corporation (subject to applicable limits).
Note 14 - Related Party Transactions
We have entered into indemnification agreements with each of our directors, executive officers and certain other officers. These agreements
require us to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject
as a result of their affiliation with us.
All contracts with related parties are at rates and terms that we believe are comparable with those that could be entered into with
independent third parties. There were no material related party transactions in 2011 . As of December 31, 2011
, there were no significant amounts
payable to or amounts receivable from related parties.
Note 15 - Stockholders' Equity
Preferred Stock
We are authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series; to establish the number
of shares included within each series; to fix the rights, preferences and privileges of the shares of each wholly unissued series and any related
qualifications, limitations or restrictions; and to increase or decrease the number of shares of any series (but not below the number of shares of a
series then outstanding) without any further vote or action by our stockholders. At December 31, 2011 and 2010 , there were 10.0 million shares
of $0.001 par value preferred stock authorized for issuance, and no shares issued or outstanding.
Common Stock
Our Certificate of Incorporation, as amended, authorizes us to issue 3.6 billion shares of common stock.
Note 16 – Stock Repurchase Program
In September 2010, our Board authorized a stock repurchase program that provides for the repurchase of up to $2.0 billion of our common
stock, with no expiration from the date of authorization, for the purpose of offsetting the impact of dilution from our equity compensation
programs. The stock repurchase activity under this stock repurchase program during 2011 is summarized as follows (in thousands, except per
share amounts):
F-33